Andhra Pradesh experienced renewed growth in open access solar capacity additions in Q1 2024, after a weak four quarters in 2023. The state accounted for the second-highest solar open access capacity (21%) in Q1 after no solar open access projects were commissioned in the previous quarter.

India added 1.8 GW of new solar open access capacity in Q1 2024, the most in any quarter to date, with the top five states accounting for 79.3% of the new installed capacity, according to the recently released Q1 2024 Mercom India Solar Open Access Market Report.

The installation numbers in Andhra were skewed by a large captive project, which was an anomaly but a welcome break after a year (2023) that recorded one of the lowest open access solar capacity additions since 2013.

Andhra Pradesh climbed from the seventh to sixth position as the cumulative installed open access capacity rose 67.1% QoQ as of March 2024, accounting for 6.7% of the country’s cumulative capacity.

 

Policy Support

After a year (2023) of low installations, the state government has been taking policy measures to promote green energy open access. Energy banking on a monthly basis, exemption of open access projects from additional surcharge, and reduction in the wheeling charges in the range of 19-44% year-over-year are some factors that could drive the growth in the coming months.

The state’s infrastructure and renewable energy resource availability make Andhra Pradesh a favorable destination for open access solar. The captive and group captive projects offer the highest savings in the state due to the exemptions from cross-subsidy and additional surcharges. Under the third-party open access model, the state provides the third-lowest landed cost for high-tension industrial consumers.

Captive solar open access allows industrial consumers in the state to save up to ₹1.36 (~$0.016)/kWh, nearly 24% of the DISCOM’s tariff at 11 kV. Similarly, commercial consumers can save up to ₹2.57 (~$0.031)/kWh, almost 37% of the electricity tariff levied by the DISCOM.

The three Andhra Pradesh DISCOMs appear more amenable to approving open access installations than before, thanks to improved ratings as a result of reduced AT&C losses, higher collection efficiency, and a narrower ACS-ARR gap.

Eastern Power Distribution Company of Andhra Pradesh (APEPDCL) was upgraded from a B in FY23 to an A rating in FY24. However, its ACS-ARR gap increased by ₹0.01 (~$0.00012)/kWh to ₹-0.07 (~$-0.00084)/kWh, AT&C losses reduced to 5.9% from 7.8% YoY as its collection efficiency improved to 100% from 98.8% YoY.

Central Power Distribution Company of Andhra Pradesh (APCPDCL) improved its rating from C to B- in 2024. Its ACS-ARR gap narrowed ₹0.57 (~$0.0069)/kWh to ₹0.07 (~$0.00084)/kWh.

Southern Power Distribution Company of Andhra Pradesh (APSPDCL) improved from a C in FY22 to a B- in FY23. Its ACS-ARR gap was reduced by ₹0.92 (~$0.011)/kWh to ₹0.04 (~$0.0048)/kWh. AT&C losses decreased to 8.1% from 13.6% YoY.

As of March 2024, open access accounted for 19.6% of the state’s cumulative installed large-scale solar capacity. Wind-solar hybrid power projects accounted for 40% of the open access solar installations, and floating solar projects accounted for 0.5%. Standalone solar projects accounted for the rest.

Mercom India’s Q1 2024 Solar Open Access Market Report provides an in-depth analysis of the state-wise open access market and data on electricity tariffs and open access charges.